The Great West & Gilded Age

1. The Great West & Gilded Age American History II - Unit 1

2. Review • Why were organizations like the Grange and Farmers’ Alliances significant for farmers in the west? • Allowed for social unity to discuss and promote the values, beliefs, and needs of farmers • The Populist party became the ______________ voice of the farmer. What 3 main goals did the Omaha Platform outline? • Political voice • Increase money in circulation, introduce a graduated income tax, have government regulation of railroads • How did supporting bimetallism advance Populist beliefs? • Bimetallism (backing currency with gold and silver) would increase the money in circulation  prices for products would rise  farmers would make more money • Who was the Democratic and Populist candidate for president in 1896? • William Jennings Bryan • Why did the Democratic and Populist candidate lose the presidential election of 1896? • Northern consumers and workers did not want higher prices on goods • What 2 legacies did the Populist party leave? • The lower class/common man could organize and have a political impact • Set the stage for future reform movements in gov’t

3. 1.3 – Expansion of Industry, Railroads, & Big Business https://www.youtube.com/watch?v=COdwYw39MAI

4. Expansion of Industry

5. Industrialization • Development of industries for the mechanical mass production of goods • Shift from making goods individually by hand  mass production using interchangeable parts and factories • Led by entrepreneurs – person who organizes, manages, and takes the risk with starting an industry/business • Mid 1800s to 1910s – mass production of raw materials using natural resources and technology • “Second Industrial Revolution”

6. Industrialization and Oil • 1859 – Edwin Drake developed the first steam engine oil drill • Made it possible to extract “black gold” directly from the ground • Growth of oil refineries to purify oil (by entrepreneurs)  kerosene and gasoline

7. Industrialization and Steel Home Insurance Building (1884) • 1890s – large iron deposits discovered in Minnesota • Iron contains carbon and bends/rusts easily  need to transform it into steel • Bessemer process – process to make steel, injecting air into iron to remove carbon and impurities • Steel’s uses • Infrastructure (transportation systems) – railroad tracks, bridges • Barbed wire • Farm equipment • Architecture – skyscrapers, rise of modern cities

8. Inventions Promote Change • Thomas Edison – incandescent light bulb (1880), later invented a system to producing and distributing electrical power • Harnessing the power of electricity  revolutionized American life • Inexpensive, convenient • Businesses - boom in industries, factories could locate anyway, run machines off electricity • Homes - Outward growth of cities, electric appliances • Cities – electric streetcars offered cheap travel

9. Inventions Promote Change • Christopher Sholes – typewriter (1867) • Changes in the workplace • Alexander Graham Bell – telephone (1876) • Changes in communication • New jobs for women • Garment/textile factory work • Clerical and secretarial office work

10. Effects of Industrialization and Inventions Positive Negative Harm to environment Depletion of natural resources Mechanization of factories  reduced human worth • Freed some labor from backbreaking work in factories • Improved standard of living for workers (shorter days, less dangerous) • New consumer markets

11. Expansion of Railroads

12. Railroads Continue to Expand • 1890s – several transcontinental railroads, east-west coasts linked • Increased travel and communication revealed a problem with a national time  “Railroad time” – 24 global time zones – to standardize shipping and receiving times

13. Railroads Continue to Expand • Growth of cities along railroads • Cities along tracks would specialize in a particular product to promote trade and interdependence (ex: Chicago – stockyard, meatpacking) • George Pullman – invented the sleeping car, founded Pullman, IL (1880) – city based on factory work, contained all the amenities of everyday life • Every aspect of life controlled by company – hope to maintain a stable work force • 1894 – workers strike in response to pay cuts and high rent

14. Railroads Continue to Expand • Growth of railroads  Increase in iron, coal, steel, lumber, and glass industries, new markets for business and consumers, and high profits  increased corruption • 1872 – CréditMobilierScandal • Union Pacific stockholders established the construction company called CréditMobilier • UP stockholders gave CM an overpriced railroad contract and sold shares of the contract to influential Republican congressmen • Congressmen approved federal subsides (financial help) to build the overpriced railroad in order to collect the profit from the completed railroad • Tarnished the Republican party’s reputation

15. Government Takes Control of Railroads • Railroad industry’s abuses of power • Misuse of fed. land grants  sold land to settlers for more $ • Fixed prices in certain markets  kept farmers in debt • Charged arbitrary high shipping rates • The Grangers (members of the Grange) lobbied for laws to regulate the railroad industry  “Granger Laws” (1871) • Established maximum shipping and passenger rates

16. Government Takes Control of Railroads • Munn v. Illinois(1877) • Railroad industry challenged the constitutionality of the Granger laws • SCOTUS ruled in favor of Granger Laws – the fed gov’t has the right to regulate private industries/businesses to serve the public’s best interest • Interstate Commerce Act (1887) • Established the Interstate Commerce Commission (ICC) • Declared the right of the fed gov’t to supervise railroad activity • Required railroads to publicize fees and rates • Not very effective, railroads blatantly ignored ICC until the Progressive Movement of the early 1900s

17. Railroads Cause Panic • Panic of 1893 – railroad companies went bankrupt  banks collapsed  national depression • Industrialists like J.P. Morgan and Cornelius Vanderbilt assumed control of railroads  By 1900, 7 companies controlled over 2/3 of railroads

18. Expansion of Big Business https://www.youtube.com/watch?v=7RmmdZuSOmI

19. Fewer Control More • Mid-late 1800s – some entrepreneurs and companies grew to consolidate and engulf an entire industry • Entrepreneurs – “Robber Barons” – big businessmen of the late 1800s, used ruthless tactics to dominate industries

20. Fewer Control More • How did the Robber Barons dominate industries? • Vertical integration – owning all of the steps of producing and selling a good • Ex: owning iron mines, steel factories, and railroads for steel distribution • Horizontal integration – owning all of the companies that manufactures a good (no competition = a monopoly) • Ex: owning all of the steel producing factories • Accomplished by merging – buying all of the stock of another company

22. Andrew Carnegie • American industrialist and philanthropist • 1873 - founded Carnegie Steel Company using the Bessemer process • Practiced vertical integration • Constantly updated technology for maximum production • Pleased employees – stock options, used other incentives to foster friendly competition among workers

23. Andrew Carnegie • Robber Barons were considered to be ruthless and selfish men, HOWEVER Carnegie is generally considered to have been honest and philanthropic. • Basically the only big businessman of the time to NOT earn the Robber Baron title • Gave 98% of wealth to various charities (over $350 million) – centered around education advancements, free and public libraries, and global peace • 14 of Carnegie’s trusts and organizations still exist today

24. Robber Barons Consolidate Industries • Most Robber Barons attempted horizontal integration through mergers  monopolies. • Complete control over its industry, therefore can charge any price for the product. • How merge? • Use a holding company • Form a trust agreement

25. Robber Barons Consolidate Industries Holding Company Trust Agreement Companies’ stocks are owned by a group of trustees that run all of the businesses in the trust  individual companies earned dividends on trust profits (even though trusts were illegal…) Ex: John D. Rockefeller’s Standard Oil Company in the Standard Oil Trust – controlled 90% of oil processing by 1880 • Company that just buys all of the stocks of other companies • Ex: J.P. Morgan’s United American Steel company bought all steel companies (including Carnegie Steel)  steel monopoly

26. Vanderbilt – controlled many railroad companies Rockefeller’s Standard Oil monopoly

27. Robber Barons’ Ruthless Tactics • Rockefeller and other Robber Barons reaped huge profits. • Paid workers extremely low wages • Drove out any competition that didn’t merge by selling oil at a lower cost than it cost to produce it THEN when market was controlled, prices skyrocketed • Critics pressured some industrialists to be philanthropic. • Rockefeller kept most assets but gave away over $500 million  Rockefeller Foundation, funds to found the University of Chicago, and a medical institute

28. Sherman Antitrust Act • Fed gov’t concerned that expanding corporations and monopolies would hinder competition in a free market. • Sherman Antitrust Act (1890) • Illegal to form a trust interfering with free trade between states or other countries • Did not clearly define “trust” and corporations found loopholes in the law • By 1900, gov’t gave up on trying to stop monopolies

29. Industrialization Bypasses the South • Late 1800s – Post-Reconstruction South remained based in agriculture and struggled to make profits. • High tariffs on raw materials and imported goods • Lack of skilled workers • Fewer railroads • Less connectivity for shipping or receiving • Less communication • Fewer markets